Gaining a Tax Advantage Justifying the restriction of the freedom of establishment, the Swedish tax authorities pointed out that the only reason for the share transfer transaction proposed by the applicants in the main proceedings is to gain a tax advantage. Therefore, Sweden is entitled to take measures to prevent its nationals from misusing rights created by the treaty, circumventing their national legislation, or to prevent individuals from improperly or fraudulently taking advantage of the provisions of community law The ECj basically accepted this line of argument. However, the court also said this could not lead to a general restriction of the freedoms guaranteed by the treaty without detailed provisions of an individual case first being closely examined by a domestic court. E The Swedish tax authorities line of argument refers to the basic guarantees of Article 43, which could not be subject to a member states disposition. Especially the charge of fraudulent use of EC law could not justify a breach or restriction of guaranteed freedoms of the EC Treaty Tax System Coherence Further, the Swedish tax authorities refer to the argument that the different treatment is justified by overriding public interest requirements relating to the need to ensure the coherence of the Swedish tax system. This basic principle was stated at first by the ECJ in the Badman case. 18 =since that decision, the ECJ has never again accepted coherence of a national tax system as a reason that justified a member state's restricting of basic freedoms. In the present case, the ECj also did not accept the need to safeguard the cohesion of a tax system To have accepted the cohesion of a national tax system as a reason that justified restriction of a one side and the taxation of payments has to be given for the same taxpayer. se deductibility on the treaty-guaranteed fundamental freedom--in this situation, a direct link between the In the present case, any fiscal coherence between the deferral of a capital gains tax and the final taxation of the gain could not be found. =Moreover, the deferral and the taxation of capital gains are realized on different levels. The double taxation convention between Sweden and Belgium insofar takes priority over Article 3, Paragraph 1, which addresses allocating the right of taxation on the hidden reserves to the residence country of the shareholder only in cases of a disposal of the shares under Article 13, Paragraph 4 of the Sweden-Belgium double taxation convention. So there is not direct correlation between advantage and disadvantage on the national taxation level of the shareholde In addition, Article 13, Paragraph 4 of the Sweden-Belgium double taxation agreement allocates the right of taxation to the country of source under the provisions of the transfer of residence within the last five years before the realization of capital gains. As a legal consequence, the double taxation convention contains the attribution of the taxation right concerning the capital gains resulting from a disposal of shares on a legal entity, so the court concluded that there is no need to ensure the coherence of the Swedish tax system by the taxation of the hidden reserves in cases of share transfers to a foreign shareholder or a Swedish company with foreign shareholders.- Furthermore, the European court pointed out that the right of taxation on capital gains could be safeguarded by measures that are less restrictive to freedom of establishment and relate specifically to the risk of a definitive departure of the taxpayer, but not on the transfer of assets to a foreign company -The court argued that the tax evasion does not depend on a transfer of shares to a Swedish company, Swedish shareholders, or a foreign company, because anti-tax avoidance measures always have to concentrate on the transferor, but not the transferee. Moreover, Sweden loses its right to tax capital gains by the time a shareholder changes his country of residence irrespective of in which country the shareholder owns shares. Therefore tax evasion or tax fraud789 Gaining a Tax Advantage Justifying the restriction of the freedom of establishment, the Swedish tax authorities pointed out that the only reason for the share transfer transaction proposed by the applicants in the main proceedings is to gain a tax advantage. Therefore, Sweden is entitled to take measures to prevent its nationals from misusing rights created by the treaty, circumventing their national legislation, or to prevent individuals from improperly or fraudulently taking advantage of the provisions of community law. The ECJ basically accepted this line of argument. However, the court also said this could not lead to a general restriction of the freedoms guaranteed by the treaty without detailed provisions of an individual case first being closely examined by a domestic court.17 The Swedish tax authorities' line of argument refers to the basic guarantees of Article 43, which could not be subject to a member state's disposition. Especially the charge of fraudulent use of EC law could not justify a breach or restriction of guaranteed freedoms of the EC Treaty. Tax System Coherence Further, the Swedish tax authorities refer to the argument that the different treatment is justified by overriding public interest requirements relating to the need to ensure the coherence of the Swedish tax system. This basic principle was stated at first by the ECJ in the Badman case. 18 Since that decision, the ECJ has never again accepted coherence of a national tax system as a reason that justified a member state's restricting of basic freedoms. 19 In the present case, the ECJ also did not accept the need to safeguard the cohesion of a tax system. To have accepted the cohesion of a national tax system as a reason that justified restriction of a treaty-guaranteed fundamental freedom--in this situation, a direct link between the deductibility on the one side and the taxation of payments has to be given for the same taxpayer. 20 In the present case, any fiscal coherence between the deferral of a capital gains tax and the final taxation of the gain could not be found. 21 Moreover, the deferral and the taxation of capital gains are realized on different levels. The double taxation convention between Sweden and Belgium insofar takes priority over Article 3, Paragraph 1, which addresses allocating the right of taxation on the hidden reserves to the residence country of the shareholder only in cases of a disposal of the shares under Article 13, Paragraph 4 of the Sweden-Belgium double taxation convention. So there is not direct correlation between advantage and disadvantage on the national taxation level of the shareholder. In addition, Article 13, Paragraph 4 of the Sweden-Belgium double taxation agreement allocates the right of taxation to the country of source under the provisions of the transfer of residence within the last five years before the realization of capital gains. As a legal consequence, the double taxation convention contains the attribution of the taxation right concerning the capital gains resulting from a disposal of shares on a legal entity, so the court concluded that there is no need to ensure the coherence of the Swedish tax system by the taxation of the hidden reserves in cases of share transfers to a foreign shareholder or a Swedish company with foreign shareholders. 22 Furthermore, the European court pointed out that the right of taxation on capital gains could be safeguarded by measures that are less restrictive to freedom of establishment and relate specifically to the risk of a definitive departure of the taxpayer, but not on the transfer of assets to a foreign company. 23 The court argued that the tax evasion does not depend on a transfer of shares to a Swedish company, Swedish shareholders, or a foreign company, because anti-tax avoidance measures always have to concentrate on the transferor, but not the transferee. Moreover, Sweden loses its right to tax capital gains by the time a shareholder changes his country of residence, irrespective of in which country the shareholder owns shares. Therefore, tax evasion or tax fraud